Search TradeWinds

LOG IN TO TRADEWINDS

Log in or subscribe to read this article

Power company fleets weigh on market scales

China's state-owned domestic fleets may seem irrelevant to the world supply-and-demand equation, but this is not the case.

The trading patterns of the Chinese flag ships associated with China's major power companies and China Cosco Bulk show that these owners pulled much of their internationally qualified Chinese-flag tonnage into the closed coastwise market last summer when domestic rates were booming and kept it there until Chinese New Year. This is especially true of their panamax fleets.

Secondhand buyers are flourishing in China's domestic coastal trades Communist Party picks its winners to carry flag at home and abroad

Since March, with domestic rates lagging, these companies have resumed a mix of coastal and international trading. The sudden appearance of dozens of Chinese-flag ships into international competition in the past three months can hardly have been without effect.

However, these power company shipowners are not among those influencing the sale-and-purchase markets as buyers these days. They are leaving the buying to smaller players.

This may be because they got their fingers burnt a few years ago by overbuilding, with generous help from financial leasing companies. One of the most ambitious players, Lanyue Energy Development-controlled Guangdong Lanhai Shipping Co, collapsed in the midst of ill-timed investments in both coal and newbuildings.

The biggest power company-owned fleet is that of Huaneng Group, which controls two separate shipping outfits. Its Shanghai Time Shipping was originally a joint venture with China Shipping Group before its merger with Cosco, while wholly owned Leading Energy Shipping (LES) is also known as Ruining Shipping.

Each outfit controls 25 bulkers from handysize to mini-capesize, although much of the LES fleet is bareboat chartered in and includes foreign-flag tonnage.

Financial sources believe Huaneng may be moving to shed some of its shipowning exposure through offloading LES to Cosco.

Southern regional power company Guangdong Yudean (or Yuedian) owns 23 ships from ultramax to mini-capesize, plus about 10 more through related Guangdong Shipping and Guangdong Haidian.

But the only power company now expressing enthusiasm for growing a bulker fleet is the smaller Shenzhen Energy Transport, which is controlled by Shenzhen Energy Group.

Most of its six panamaxes were ordered as newbuildings at Chinese yards. Last year, it scrapped two veteran Japanese-built ships and paid Allseas Marine some $14.5m for the 75,200 dwt Dream Seas (renamed Jia Xi, built 2009). The company referred to the upgrade as part of a "new phase" of international competitive development.

Besides directly controlled fleets, China's biggest non state-owned domestic shipowner, Shanghai-based Fujian Guohang Ocean Shipping, also belongs in this group because of its close ties to he world's largest power company China Energy Investment Corp (CEIC). Guohang operates one fleet under the Tianjin Guodian brand in joint venture with one of the state-owned power companies that merged as CEIC.

Between its wholly owned fleet and that of joint venture Guodian, Wang Yanping-controlled Guohang has 37 ships from handymax to panamax.

Although Guohang is an over-the-counter listed company controlled by a private individual and has international clients such as BHP Billiton, its government ties are tight. The "Guo" in the name means "national", and customers who ring up its executives and happen to be put on hold will be treated to stirring Chinese Communist Party anthems while waiting.

Nevertheless, Guohang is a flexible trader with a large slice of its fleet poised to switch from the national to the international trades, and is one of the few power company-related owners actively developing its fleet.

TradeWinds recently reported that the company was in talks to extend a kamsarmax newbuilding series to 10 ships for both foreign and Chinese flags.

Last year, it bought the 51,200-dwt supramax Steel Courage (built 2002) from SteelShips, renaming it Guo Dian 36. And the company struck a deal with Augustea to buy the 75,700-dwt panamax Pina Cafiero (built 2002), which now trades as the Guo Dian 38.

On the other side of the table from the power companies is a very active independent, Dongguan Haichang Shipping.

Controlled by coal trader and terminal owner Dongguan Haichang Industry in Guangzhou, it has the advantage of an annual captive cargo base of tens of millions of tonnes of coal moving into southern Guangdong province, both from northern China and Kalimantan in Indonesia.

Haichang has turned up four times in the past couple of years as the "unknown Chinese buyer", most recently of K Line's 88,300-dwt post panamax Corona Frontier (built 2000). The company paid $11.5m in January for the ship, since renamed Xin Dong Guan 12, at maximum import age but a price level significantly above Haichang's earlier spends.

The company controls 13 ships, 10 under the Chinese flag. Seven relatively modern Chinese-flag vessels shuttle exclusively between the coal load port of Qinhuangdao and Dongguan Haichang's southern home base, occasionally diverting to a disport along the way. They ballast back to the load port with no hope of any backhaul cargo, but last year's strong domestic rates were more than ample consolation.

But this year, Haichang, like Cosco and its customers, has been moving dual-qualified Chinese-flag ships out of the dedicated north-south shuttle trade as domestic rates have lagged and the foreign spot market has threatened to overtake them.

Product packages starting from $94 per month

Get the latest and most important news of the day – sign up for free to the TradeWinds Daily News Update

Power company fleets weigh on market scales

China's state-owned domestic fleets may seem irrelevant to the world supply-and-demand equation, but this is not the case.

The trading patterns of the Chinese flag ships associated with China's major power companies and China Cosco Bulk show that these owners pulled much of their internationally qualified Chinese-flag tonnage into the closed coastwise market last summer when domestic rates were booming and kept it there until Chinese New Year. This is especially true of their panamax fleets.

Secondhand buyers are flourishing in China's domestic coastal trades Communist Party picks its winners to carry flag at home and abroad

Since March, with domestic rates lagging, these companies have resumed a mix of coastal and international trading. The sudden appearance of dozens of Chinese-flag ships into international competition in the past three months can hardly have been without effect.

However, these power company shipowners are not among those influencing the sale-and-purchase markets as buyers these days. They are leaving the buying to smaller players.

This may be because they got their fingers burnt a few years ago by overbuilding, with generous help from financial leasing companies. One of the most ambitious players, Lanyue Energy Development-controlled Guangdong Lanhai Shipping Co, collapsed in the midst of ill-timed investments in both coal and newbuildings.

The biggest power company-owned fleet is that of Huaneng Group, which controls two separate shipping outfits. Its Shanghai Time Shipping was originally a joint venture with China Shipping Group before its merger with Cosco, while wholly owned Leading Energy Shipping (LES) is also known as Ruining Shipping.

Each outfit controls 25 bulkers from handysize to mini-capesize, although much of the LES fleet is bareboat chartered in and includes foreign-flag tonnage.

Financial sources believe Huaneng may be moving to shed some of its shipowning exposure through offloading LES to Cosco.

Southern regional power company Guangdong Yudean (or Yuedian) owns 23 ships from ultramax to mini-capesize, plus about 10 more through related Guangdong Shipping and Guangdong Haidian.

But the only power company now expressing enthusiasm for growing a bulker fleet is the smaller Shenzhen Energy Transport, which is controlled by Shenzhen Energy Group.

Most of its six panamaxes were ordered as newbuildings at Chinese yards. Last year, it scrapped two veteran Japanese-built ships and paid Allseas Marine some $14.5m for the 75,200 dwt Dream Seas (renamed Jia Xi, built 2009). The company referred to the upgrade as part of a "new phase" of international competitive development.

Besides directly controlled fleets, China's biggest non state-owned domestic shipowner, Shanghai-based Fujian Guohang Ocean Shipping, also belongs in this group because of its close ties to he world's largest power company China Energy Investment Corp (CEIC). Guohang operates one fleet under the Tianjin Guodian brand in joint venture with one of the state-owned power companies that merged as CEIC.

Between its wholly owned fleet and that of joint venture Guodian, Wang Yanping-controlled Guohang has 37 ships from handymax to panamax.

Although Guohang is an over-the-counter listed company controlled by a private individual and has international clients such as BHP Billiton, its government ties are tight. The "Guo" in the name means "national", and customers who ring up its executives and happen to be put on hold will be treated to stirring Chinese Communist Party anthems while waiting.

Nevertheless, Guohang is a flexible trader with a large slice of its fleet poised to switch from the national to the international trades, and is one of the few power company-related owners actively developing its fleet.

TradeWinds recently reported that the company was in talks to extend a kamsarmax newbuilding series to 10 ships for both foreign and Chinese flags.

Last year, it bought the 51,200-dwt supramax Steel Courage (built 2002) from SteelShips, renaming it Guo Dian 36. And the company struck a deal with Augustea to buy the 75,700-dwt panamax Pina Cafiero (built 2002), which now trades as the Guo Dian 38.

On the other side of the table from the power companies is a very active independent, Dongguan Haichang Shipping.

Controlled by coal trader and terminal owner Dongguan Haichang Industry in Guangzhou, it has the advantage of an annual captive cargo base of tens of millions of tonnes of coal moving into southern Guangdong province, both from northern China and Kalimantan in Indonesia.

Haichang has turned up four times in the past couple of years as the "unknown Chinese buyer", most recently of K Line's 88,300-dwt post panamax Corona Frontier (built 2000). The company paid $11.5m in January for the ship, since renamed Xin Dong Guan 12, at maximum import age but a price level significantly above Haichang's earlier spends.

The company controls 13 ships, 10 under the Chinese flag. Seven relatively modern Chinese-flag vessels shuttle exclusively between the coal load port of Qinhuangdao and Dongguan Haichang's southern home base, occasionally diverting to a disport along the way. They ballast back to the load port with no hope of any backhaul cargo, but last year's strong domestic rates were more than ample consolation.

But this year, Haichang, like Cosco and its customers, has been moving dual-qualified Chinese-flag ships out of the dedicated north-south shuttle trade as domestic rates have lagged and the foreign spot market has threatened to overtake them.